You’re thinking about this way too much. Just throw the mustard in your mouth. Surely it’s not that hot.
The spicy child is the child of spicy. So, not as spicy as mamma spicy, but still a bit spicy. This child spicy is mustard. Not too spicy, but not too mild.
The reading is 辛い (からい) and the on'yomi reading for 子 combined together. It's one of those weird words that mixes the on'yomi and kun'yomi readings.